As Oil Races Toward $100, Consumers Tell OPEC+ Enough Is Enough

As Oil Races Toward $100,
Consumers Tell OPEC+ Enough
Is Enough
For the past year, oil consuming countries have become
increasingly anxious at crude’s resurgence: first to $50 a
barrel, then $75 and now to more than $85. And when Vladimir
Putin, one of the leaders of the OPEC+ cartel, warned
that $100 a barrel was a distinct possibility, the alarm bells
really started ringing.

Now, as quickening inflation pushes some central banks towards
earlier-than-expected rate of interest hikes, the U.S. India,
Japan and different consuming international locations are
placing the strongest diplomatic strain on the cartel in
years.

Behind closed doorways, an intense marketing campaign is being
waged to influence OPEC+ to hurry up its output will increase,
in line with a number of diplomats and business insiders
concerned within the contacts. The cartel, which meets just
about on Nov. 4 to assessment coverage, is at the moment

boosting output at a price of 400,000 barrels a day every
month.

The personal efforts come on prime of current public appeals.
The Biden administration is more and more alarmed by rising
gasoline costs which have reached a 7-year excessive, and has
been calling on OPEC+ for weeks to pump extra oil. Japan, the
world’s fourth-largest oil client, took the uncommon step of
including its voice to these calls in late October — a primary
for Tokyo since 2008. India, the third-largest client, has
additionally requested for extra crude. China has been silent
in public, however is equally vocal in personal, diplomats
stated.

“We found ourselves in an energy crisis,” Amos Hochstein, the
highest U.S. power diplomat, stated this week, reflecting a
view broadly held view by large oil consuming nations.
“Producers should ensure that oil markets and gas markets are
balanced.”
U.S., Japanese and Indian officers have spoken privately
amongst themselves and likewise reached out to different large
customers and oil-producing international locations. The calls
began round three weeks in the past, however have intensified
in current days after costs handed $85 a barrel.

The Japanese “government is currently asking oil-producing
countries to increase production in the Middle East,” in line
with Tsutomu Sugimori, chairman of the Petroleum Association
of Japan. “As the petroleum industry, we hope oil-producing
countries, including OPEC, will take appropriate steps so as
not to hinder a full-fledged recovery of the world’s economy.”

So far, Saudi Arabia and others have refused to go faster,
arguing the month-to-month 400,000 barrel-a-day additions are
sufficient to fulfill the urge for food for oil in a world
financial system nonetheless nursing the injuries of the
pandemic.

“We are not yet out of the woods,” Saudi Energy Minister

Prince Abdulaziz bin Salman stated on Bloomberg Television
final week. “We need to be careful. The crisis is contained
but is not necessarily over.”

The prince’s feedback have been echoed in personal and public
by others inside the OPEC+, an alliance of nations accounting
for almost two-thirds of the world’s oil provide. Azerbaijan
Energy Minister Parviz Shahbazov stated for instance there
wasn’t a must rush quicker output will increase. “We have
agreed on a very wise and smart program for months to come,”
he stated.

Saudi Arabia will most likely get its approach if it pushes to
stay with a 400,000 barrel-a-day hike subsequent. For many
OPEC+ officers they’re being made a scapegoat for a disaster
they didn’t create. The downside, they argue, is just not oil
however hovering pure gasoline and coal costs, which in flip
have boosted electrical energy costs. Even if the cartel was
to go quicker, that wouldn’t resolve these shortages, they
stated.

Some within the group who can be open to doing extra,
nevertheless, if Saudi Arabia took the lead, a number of OPEC+
delegates stated, asking to not be named earlier than the
assembly takes place.

Shifting Mood

For most of this 12 months oil-consuming nations accepted
OPEC+ was doing sufficient. But after oil costs rose from $70
to greater than $85 a barrel and crude inventories in
industrialized international locations declined sharply over
the past couple of months, the temper has shifted. Now
officers from consuming international locations consider the
oil market is under-supplied.

Many consuming international locations have been reluctant to
name extra overtly for additional oil manufacturing simply
earlier than a serious UN local weather change summit in

Glasgow, Scotland, referred to as COP26. But even that notion
downside is beginning to fade. Jake Sullivan, the U.S.
mational safety advisor, defined that Washington might combat
in opposition to local weather change and guarantee there’s
sufficient power to gasoline financial progress within the
quick future.

“Our view is that the global recovery should not be imperiled
by a mismatch between supply and demand,” Sullivan stated on
board Air Force One whereas en path to Rome for this week’s
Group of 20 summit. “And action needs to be taken,” he stated,
revealing that American diplomats have been in contact with
“the largest consuming countries in the world to include China
as well as India, Japan, Korea, the Europeans, and others.”

President Joe Biden “will have those conversations at the
G-20,” Sullivan stated. “We will see what comes as a result of
those conversations.”

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Making the most of our energy
wealth
Lebanon is presented with the most serious challenges it has
faced in the past decade. The economy is struggling, the
internal security situation is deteriorating and the country’s
neighbors pose real threats. In these circumstances the very
fact that the country continues to operate can be seen as a
success. And amidst everything, there are opportunities — not
just in newfound offshore oil and gas but also within the
country’s ingenious population.

As we head into 2013, what can be done to help the country
unite, to overcome its challenges and ultimately to grow? Over
the course of this week, eight influential figures will
address seven important topics, each suggesting one proposal
to help the country move forward. In this article, the World
Energy Council’s Roudi Baroudi calls for measures to protect
the country’s offshore oil and gas from corruption.

My one hope for Lebanon in 2013 is that all of its various

political leaders and factions take and/or allow the necessary
steps for sound and sustainable development of the country’s
newly promising energy sector.

Why? Because virtually all of the measures involved a) are
just common sense; b) require little or no investment of
scarce public resources; and c) happen to be the same changes
required to reform, rebuild and genuinely reconcile Lebanon as
a whole.

On the overall energy front, the first change would have to be
one of mindset. For too long, the sector has been treated by
officials, their relatives and their cronies as a cash-cow for
themselves rather than as an essential ingredient in building
and operating a modern nation-state. From heavy industry to
the average family, everyone is affected by the chronic power
shortfall. We are more than a decade into the 21st century:
doing homework by candlelight should be the stuff of tales
told by grandparents, not the current experiences of
schoolchildren also learning to use computers. Imagine if
those tasked with formulating and implementing energy policy
were concerned at last with basic public goals: namely, how
best to deliver affordable, reliable and sustainable energy
(electricity, LPG “cooking gas”, gasoline, diesel oil, fuel
oil) to all Lebanese.

In turn, this new attitude could quickly convince Lebanese
politicians of the need to follow the law by forming a
regulatory authority for electricity, and one for the nascent
oil and gas industry as well. This would go hand in hand with
a government newly determined to ensure transparency, for
instance by disseminating all available general information
and specific knowledge about the process(es) by which the
future of the oil and gas sector is being planned and managed.

The same enlightened leadership would seek out and adopt the
best practices at every stage of its oil and gas venture,
starting at the beginning. For example, Lebanon should spend

its taxpayers’ money wisely by restricting its paid
advertising to globally recognized industry publications and
highly regarded professional and financial publications like
the Economist and the Financial Times, and using the websites
of the World Bank and the European Commission – for free – in
order to ensure the broadest possible international awareness
of the country’s hydrocarbon potential. The government could
then consult the latter two bodies and other reputable
institutions to help understand the experiences of other
emerging energy powers and avoid making the same costly
mistakes.

Thus animated, not just by the need to closely monitor oil and
gas developments, but also by its duty to keep the public
informed, the Ministry of Energy and Water would secure timely
and professional analysis of the seismic studies immediately
following their completion – then, based on these findings,
publish the next steps approved by the government in order to
pursue development of the fields.

In addition, with the seismic results in hand, the ministry
could commission a well-known and qualified international
consulting firm to prepare a comprehensive energy master-plan
encompassing the entire industry and each of its sub-sectors.
The electricity subsector component would be based on a long-
term, least-cost expansion of generation and transmission
which would take into account feasible grid interconnections
with other countries in the region, the role of renewable
energy, and integration of the environmental and climate
change dimensions to demonstrate Lebanon’s strategy for
reducing its carbon footprints in its production and use of
energy.

When it comes to the implementation of specific projects, the
ministry would act diligently to ensure not only that all
necessary environmental impact studies were being carried out,
but also that the implementation of mitigating measures was
done in accordance with both international best practice and

the requisite environmental and social guidelines applicable
in Lebanon.

The same spirit of respecting the law and pursuing the
national interest also would cause Lebanese politicians,
whatever their party loyalties, to avidly support the
continued reform of the judiciary, an acceleration of
nominations to fill judicial vacancies, and other measures
designed to strengthen the rule of law. All of these steps
would magnify the impact of the others by helping to ensure
that pieces of legislation passed by Lebanon’s Parliament are
no longer regarded as idle suggestions to be ignored at will.

All of the foregoing – flowing from the original wish that
Lebanon’s main political actors would stop obstructing oil and
gas progress – would ensure a dynamic and profitable energy
sector capable of alleviating many national problems,
especially poverty. Properly managed, oil and gas would supply
ample revenues for decades to come, providing the Lebanese
state and Lebanese society with the resources they need to
finally end the twin evils of systematic inequality and
sectarian resentment.

If we really want our grandchildren not to be doing their
homework by candlelight, then real change is needed. With
simple steps and more enlightened leadership, we can start to
make it happen in 2013.

Roudi E. Baroudi is an independent energy and environmental
consultant and Secretary General of the World Energy Council –
Lebanon Member Committee

What    green    artificial
intelligence needs
Long before the real-world effects of climate change became so
abundantly obvious, the data painted a bleak picture – in
painful detail – of the scale of the problem. For decades,
carefully collected data on weather patterns and sea
temperatures were fed into models that analysed, predicted,
and explained the effects of human activities on our climate.
And now that we know the alarming answer, one of the biggest
questions we face in the next few decades is how data-driven
approaches can be used to overcome the climate crisis.
Data and technologies like artificial intelligence (AI) are
expected to play a very large role. But that will happen only
if we make major changes in data management. We will need to
move away from the commercial proprietary models that
currently predominate in large developed economies. While the
digital world might seem like a climate-friendly world (it is
better to Zoom to work than to drive there), digital and
Internet activity already accounts for around 3.7% of total
greenhouse-gas (GHG) emissions, which is about the same as air
travel. In the United States, data centres account for around
2% of total electricity use.
The figures for AI are much worse. According to one estimate,
the process of training a machine-learning algorithm emits a
staggering 626,000lb (284,000kg) of carbon dioxide – five
times the lifetime fuel use of the average car, and 60 times
more than a transatlantic flight. With the rapid growth of AI,

these emissions are expected to rise sharply. And Blockchain,
the technology behind Bitcoin, is perhaps the worst offender
of all. On its own, Bitcoin mining (the computing process used
to verify transactions) leaves a carbon footprint roughly
equivalent to that of New Zealand.
Fortunately, there are also many ways that AI can be used to
cut CO2 emissions, with the biggest opportunities in
buildings, electricity, transport, and farming. The
electricity sector, which accounts for around one-third of GHG
emissions, advanced the furthest. The relatively small cohort
of big companies that dominate the sector have recognised that
AI is particularly useful for optimising electricity grids,
which have complex inputs – including the intermittent
contribution of renewables like wind power – and complex usage
patterns. Similarly, one of Google DeepMind’s AI projects aims
to improve the prediction of wind patterns and thus the
usability of wind power, enabling “optimal hourly delivery
commitments to the power grid a full day in advance.”
Using similar techniques, AI can also help to anticipate
vehicle traffic flows or bring        greater precision to
agricultural management, such as      by predicting weather
patterns or pest infestations.
But Big Tech itself has been slow to engage seriously with the
climate crisis. For example, Apple, under pressure to keep
delivering new generations of iPhones or iPads, used to be
notoriously uninterested in environmental issues, even though
it – like other hardware firms – contributes heavily to the
problem of e-waste. Facebook, too, was long silent on the
issue, before creating an online Climate Science Information
Center late last year. And until the launch of the $10bn Bezos
Earth Fund in 2020, Amazon and its leadership also was missing
in action. These recent developments are welcome, but what
took so long?
Big Tech’s belated response reflects the deeper problem with
using AI to help the world get to net-zero emissions. There is
a wealth of data – the fuel that powers all AI systems – about
what is happening in energy grids, buildings, and

transportation systems, but it is almost all proprietary and
jealously guarded within companies. To make the most of this
critical resource – such as by training new generations of AI
– these data sets will need to be opened up, standardised, and
shared.
Work on this is already underway. The C40 Knowledge Hub offers
an interactive dashboard to track global emissions; NGOs like
Carbon Tracker use satellite data to map coal emissions; and
the Icebreaker One project aims to help investors track the
full carbon impact of their decisions. But these initiatives
are still small-scale, fragmented, and limited by the data
that are available.
Freeing up much more data ultimately will require an act of
political will. With local or regional “data commons,” AIs
could be commissioned to help whole cities or countries cut
their emissions. As a widely circulated 2019 paper by David
Rolnick of the University of Pennsylvania and 21 other
machine-learning experts demonstrates, there is no shortage of
ideas for how this technology can be brought to bear.
But that brings us to a second major challenge: Who will own
or govern these data and algorithms? Right now, no one has a
good, complete answer. Over the next decade, we will need to
devise new and different kinds of data trusts to curate and
share data in a variety of contexts.
For example, in sectors like transport and energy, public-
private partnerships (for example, to gather “smart-meter”
data) are probably the best approach, whereas in areas like
research, purely public bodies will be more appropriate. The
lack of such institutions is one reason why so many “smart-
city” projects fail. Whether it is Google’s Sidewalk Labs in
Toronto or Replica in Portland, they are unable to persuade
the public that they are trustworthy.
We will also need new rules of the road. One option is to make
data sharing a default condition for securing an operating
license. Private entities that provide electricity, oversee 5G
networks, use city streets (such as ride-hailing companies),
or seek local planning permission would be required to provide

relevant data in a suitably standardised, anonymised, and
machine-readable form.
These are just a few of the structural changes that are needed
to get the tech sector on the right side of the fight against
climate change. The failure to mobilise the power of AI
reflects both the dominance of data-harvesting business models
and a deep imbalance in our public institutional structures.
The European Union, for example, has major financial agencies
like the European Investment Bank but no comparable
institutions that specialise in orchestrating the flow of data
and knowledge. We have the International Monetary Fund and the
World Bank, but no equivalent World Data Fund.
This problem is not insoluble. But first, it must be
acknowledged and taken seriously. Perhaps then a tiny fraction
of the massive financing being channelled into green
investments will be directed toward funding the basic data and
knowledge plumbing that we so urgently need. – Project
Syndicate

• Geoff Mulgan, a former chief executive of NESTA, is
Professor of Collective Intelligence, Public Policy and Social
Innovation at University College London and the author of Big
Mind: How Collective Intelligence Can Change Our World.

Saudi    energy                          minister
dismisses calls                        for extra
OPEC+ barrels
MOSCOW, Oct 14 (Reuters) – OPEC leader Saudi Arabia dismissed
calls for speedier oil output increases on Thursday, saying
its efforts with allies were enough and protecting the oil
market from the wild price swings seen in natural gas and coal
markets.

“What we see in the oil market today is an incremental (price)
increase of 29%, vis-à-vis 500% increases in (natural) gas
prices, 300% increases in coal prices, 200% increases in NGLs
(natural gas liquids) …,” Saudi energy minister Prince
Abdulaziz bin Salman told a forum in Moscow on Thursday.

The Organization of the Petroleum Exporting Countries and
allies led by Russia, collectively known as OPEC+, have done a

“remarkable” job acting as “so-called regulator of the oil
market,” he said.

“Gas markets, coal markets, other sources of energy need a
regulator. This situation is telling us that people need to
copy and paste what OPEC+ has done and what it has achieved.”

Asked about calls by major consumers like the United States
for OPEC+ to increase production further to cool off rising
oil prices, Prince Abdulaziz said: “I keep telling people we
are increasing production.”

He said OPEC+ would be adding 400,000 barrels per day (bpd) in
November, and then again in the following months.

At its meeting earlier this month, OPEC+ stuck to its
agreement of increasing production by 400,000 bpd a month as
it unwinds production cuts.

“We want to make sure that we reduce those excess capacities
that we have developed as a result of COVID,” he said, adding
that OPEC+ wanted to do it “in a gradual, phased-in approach”.

Prince Abdulaziz said that while OECD oil inventories were on
track to normalise at the end of this year, 2022 was looking
“a bit of a challenging year”.

OPEC+ figures show the oil market is set for a surplus of
about 1.4 million bpd next year.

Additional reporting by Katya Golubkova and Olesya Astakhova
in Moscow, and Ahmad Ghaddar in London Editing by Jason Neely
and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.

China’s Energy Crisis Is
Hitting   Everything From
iPhones to Milk
NEW DELHI: The hit from China’s energy crunch is starting to
ripple throughout the globe, hurting everyone from Toyota
Motor Corp to Australian sheep farmers and makers of cardboard
boxes.
Not only is the extreme electricity shortage in the world’s
largest exporter set to hurt its own growth, the knock-on
impact to supply chains could crimp a global economy
struggling to emerge from the pandemic.
The timing couldn’t be worse, with the shipping industry
already facing congested supply lines that are delaying
deliveries of clothes and toys for the year-end holidays. It

also comes just as China starts its harvest season, raising
concerns over sharply higher grocery bills.
China’s export growth unexpectedly surged in August, with port
disruptions due to fresh outbreaks of the delta virus having
limited impact on trade.
“If the electricity shortages and production cuts continue,
they could become yet another factor causing global supply-
side problems, especially if they start to affect the
production of export products,” said Louis Kuijs, senior Asia
economist at Oxford Economics.
Slower growth
Economists have already warned of slower growth in China. At
Citigroup, a vulnerability index indicates that exporters of
manufactured goods and commodities are particularly at risk to
a weakening Chinese economy.
Neighbors like Taiwan and Korea are sensitive, as are metal
exporters such as Australia and Chile, and key trading
partners such as Germany are also somewhat exposed.
As for consumers, the question is whether manufacturers will
be able to absorb higher costs or will pass them along.
“This is looking like another stagflationary shock for
manufacturing, not just for China but for the world,” said
Craig Botham, chief China economist at Pantheon
Macroeconomics. “The price increases by now are pretty broad-
based — a consequence of China’s deep involvement in global
supply chains.”
UN index of global food costs is at the highest in a decade
Beijing has been scouring for power supplies as it tries to
stabilize the situation. The impact on the global economy will
depend on how quickly those efforts bear fruit.
Many Chinese factories reduced production for this week’s
“Golden Week” holiday, and economists are closely watching
whether power shortages will return as they ramp up again.
Already, though, some industries are under pressure, and the
damage they’re seeing could quickly fan out to other sectors.
Paper
Consider paper. Production of cardboard boxes and packing

materials was already strained by skyrocketing demand during
the pandemic.
Now, temporary shutdowns in China have hit output even harder,
leading to a possible 10% to 15% reduction in supply for
September and October, according to Rabobank. That will add
further complications to businesses already suffering from the
global paper shortage.
Food
The food supply chain is also at risk as the energy crisis
makes harvest season more challenging for the world’s biggest
agricultural producer.
Global food prices have already jumped to a decade high, and
worries are mounting that the situation will worsen as China
struggles to handle crops from corn to soy to peanuts and
cotton.
In recent weeks, several plants were forced to shut or reduce
output to conserve electricity, such as soybean processors
that crush beans to produce meal for animal feed and oil for
cooking.
Prices for fertilizer, one of the most important elements of
agriculture, are skyrocketing, slamming farmers already
buckling under the strain of rising costs.
The processing industry is set to be more severely affected
than staples such as grains and meat, Rabobank analysts wrote
in a report this week. In the dairy sector, power cuts could
disrupt the operation of milking machines, while pork
suppliers will face pressure from tighter supply of cold
storage.
Wool
Outside of China, Australian sheep farmers are bracing for
weaker demand just as they seek to sell their wool at
auctions. The industry saw Chinese mills reduce production by
up to 40% due to power cuts last week, Australian Broadcasting
Corp reported.
Tech
The tech world could also see a dramatic hit, given that China
is the world’s biggest production base for gadgets from

iPhones to gaming consoles, and a major center for the
packaging of semiconductors used in autos and appliances.
Several companies have already experienced downtime at their
Chinese facilities to comply with local restrictions. Pegatron
Corp, a key partner for Apple, said last month it began to
adopt energy-saving measures, while ASE Technology Holding Co,
the world’s biggest chip packager, halted production for
several days.
The overall impact on the tech sector has so far been limited
because of customary shutdowns around the week-long holiday.
Should the energy crunch worsen, it could hit production ahead
of the crucial year-end shopping season.
Industry giants including Dell Technologies Inc and Sony Group
Corp can ill afford another supply shock after pandemic-
induced turmoil fomented a global chip shortage that will
extend well into 2022 and beyond.
Automakers
Any further deterioration of the semiconductor market would
also add headaches for automakers, who have already seen
production crunched by the chip shortage.
The industry, which is high on the list of protected sectors
in times like these, has thus far largely been spared from the
effects of the power crisis.
Still, there have been some isolated instances. Toyota, which
produces more than 1 million vehicles a year in China at
plants centered around Tianjin and Guangzhou, has said some of
its operations have been impacted by the power shortages.

Clean Energy                     Has        Won        the
Economic Race
For decades, spectacularly inaccurate forecasts have
underestimated the potential of clean energy, buying time for
the fossil-fuel industry. But as two new analyses from
authoritative institutions show, renewables have already
convinced the market and are now poised for exponential
growth.

DENVER – For decades, we at the Rocky Mountain Institute (now
RMI) have argued that the transition to clean energy will cost
less and proceed faster than governments, firms, and many
analysts expect. In recent years, this outlook has been fully
vindicated: costs of renewables have consistently fallen
faster than expected, while deployment has proceeded more
rapidly than predicted, thereby reducing costs even further.

Thanks to this virtuous cycle, renewables have broken through.
And now, new analyses from two authoritative research
institutions have added to the mountain of data showing that a
rapid clean-energy transition is the least expensive path

forward.

Policymakers, business leaders, and financial institutions
urgently need to consider the promising implications of this
development. With the United Nations Climate Change Conference
(COP26) in Glasgow fast approaching, it is imperative that
world leaders recognize that achieving the Paris climate
agreement’s 1.5° Celsius warming target is not about making
sacrifices; it is about seizing opportunities. The negotiation
process must be reframed so that it is less about burden-
sharing and more about a lucrative race to deploy cleaner,
cheaper energy technologies.

With the world already suffering from climate-driven extreme
weather events, a rapid clean-energy transition also has the
virtue of being the safest route ahead. If we fail at this
historic task, we risk not only wasting trillions of dollars
but also pushing civilization further down a dangerous and
potentially catastrophic path of climate change.

One can only guess why forecasters have, for decades,
underestimated the falling costs and accelerating pace of
deployment for renewables. But the results are clear: bad
predictions have underwritten trillions of dollars of
investment in energy infrastructure that is not only more
expensive but also more damaging to human society and all life
on the planet.

We now face what may be our last chance to correct for decades
of missed opportunities. Either we will continue to waste
trillions more on a system that is killing us, or we will move
rapidly to the cheaper, cleaner, more advanced energy
solutions of the future.

New studies have shed light on how a rapid clean-energy
transition would work. In the International Renewable Energy
Agency (IRENA) report The Renewable Spring, lead
author Kingsmill Bond shows that renewables are following the

same exponential growth curve as past technology revolutions,
hewing to predictable and well-understood patterns.

Accordingly, Bond notes that the energy transition will
continue to attract capital and build its own momentum. But
this process can and should be supported to ensure that it
proceeds as quickly as possible. Policymakers who want to
drive change must create an enabling environment for the
optimal flow of capital. Bond clearly lays out the sequence of
steps that this process entails.

Examining past energy revolutions reveals several important
insights. First, capital is attracted to technological
disruptions, and tends to flow to the areas of growth and
opportunity associated with the start of these revolutions. As
a result, once a new set of technologies passes its gestation
period, capital becomes widely available. Second, financial
markets draw forward change. As capital moves, it speeds up
the process of change by allocating new capital to growth
industries, and by withdrawing it from those in decline.

The current signals from financial markets show that we are in
the first phase of a predictable energy transition, with
spectacular outperformance by new energy sectors and the de-
rating of the fossil-fuel sector. This is the point where wise

policymakers can step in to establish the necessary
institutional framework to accelerate the energy transition
and realize the economic benefits of building local clean-
energy supply chains. As we can see from market trends
highlighted in the IRENA report, the shift is already well
underway.

Reinforcing the findings from the IRENA report, a
recent analysis from the Institute for New Economic Thinking
(INET) at the Oxford Martin School shows that a rapid
transition to clean energy solutions will save trillions of
dollars, in addition to keeping the world aligned with the
Paris agreement’s 1.5°C goal. A slower deployment path would
be financially costlier than a faster one and would incur
significantly higher climate costs from avoidable disasters
and deteriorating living conditions.

Owing to the power of exponential growth, an accelerated path
for renewables is eminently achievable. The INET Oxford report
finds that if the deployment of solar, wind, batteries, and
hydrogen electrolyzers continues to follow exponential growth
trends for another decade, the world will be on track to

achieve net-zero-emissions energy generation within 25 years.

In its own coverage of the report, Bloomberg News suggests as
a “conservative estimate” that a rapid clean-energy transition
would save $26 trillion compared with continuing with today’s
energy system. After all, the more solar and wind power we
build, the greater the price reductions for those
technologies.

Moreover, in his own response to the INET Oxford study, Bill
McKibben of 350.org points out that the cost of fossil fuels
will not fall, and that any technological learning curve
advantage for oil and gas will be offset by the fact that the
world’s easy-access reserves have already been exploited.
Hence, he warns that precisely because solar and wind will
save consumers money, the fossil-fuel industry will continue
to try to slow down the transition in order to mitigate its
own losses.

We must not allow any further delay. As we approach COP26, it
is essential that world leaders understand that we already
have cleaner, cheaper energy solutions ready to deploy now.
Hitting our 1.5°C target is not about making sacrifices; it is
about seizing opportunities. If we get to work now, we can
save trillions of dollars and avert the climate devastation
that otherwise will be visited upon our children and
grandchildren.

Aramco warns world’s spare
oil supplies are falling
rapidly
Saudi Aramco said oil-output capacity across the world is
dropping quickly and companies need to invest more in
production.

It’s a “huge concern,” Chief Executive Officer Amin Nasser
said in an interview in Riyadh, Saudi Arabia’s capital. “The
spare capacity is shrinking.”

His comments come with crude prices having soared 70% this
year to around $85 a barrel. Many major consumers, including
the U.S., Japan and India, have called on producers to pump
more.

The supply deficit in oil markets could worsen in 2022 if the

coronavirus pandemic eases and more people fly, he said.

Declining rapidly

“If there’s aviation pick up next year, that spare capacity
will be depleted,” he said. “It’s now getting to a situation
where there’s limited supply — whatever is left that’s spare
is declining rapidly.”

Several oil and gas traders have criticized governments and
climate activists for calling on companies to stop investing
in fossil fuels, saying that will cause shortages of energy in
the coming decade.

Aramco, the world’s biggest oil company, is investing billions
of dollars to raise its daily capacity to 13 million barrels
from 12 million. It expects to complete the project by 2027.

Many Wall Street banks and OPEC+ members doubt there will be
supply shortages next year. JPMorgan Chase & Co. has said oil
markets will shift to a supply surplus of 1 million barrels by
March from a deficit of around 1.5 million barrels now.

Saudi Arabia’s energy minister told Bloomberg on Saturday
there could be a “huge uplift” in crude inventories in 2022.

“We still have Covid,” Prince Abdulaziz bin Salman said,
justifying OPEC+’s refusal to ease deep supply cuts it began
last year any faster. “We still have jet fuel limited in terms
of growth. If you do more now, you’re accelerating the
problem.”

The Organization of Petroleum Exporting Countries and its
partners are increasing daily output by 400,000 barrels each
month. The 23-nation group, led by Saudi Arabia and Russia,
next meets on Nov. 4 to decide whether to change strategy.

Written By
Salma El Wardany and Matthew Martin

How China Plans to Become
Carbon-Neutral by 2060
China’s industrialization has occurred at a breathtaking pace,
lifting hundreds of millions out of poverty and transforming
the country into the world’s factory floor. That’s also made
it the biggest emitter of carbon dioxide, the main greenhouse
gas driving climate change. The most-populous nation has set
itself the ambitious goal of becoming carbon-neutral by 2060,
a challenging target given it hasn’t even reached its
emissions peak. To get there, President Xi Jinping wants to
transition away from an economy reliant on coal and other
fossil fuels by switching to renewable energy and developing
new technology to capture emissions.

1. What is carbon neutral?

It means cutting as much of your carbon dioxide emissions as
possible and then offsetting what you can’t eliminate. For a
country, this could mean switching to renewable energy such as

solar power instead of coal and investing in projects that
absorb carbon dioxide, such as reforestation. Carbon neutral
has become a goal of companies and countries alike to address
public concerns about the impact emissions have on the
climate.

2. What is China’s goal?

Even though China is the world’s second-largest economy, it’s
still classified as a developing nation and hasn’t reached its
emissions peak. That’s forecast to come by 2030, with Xi
committing to carbon neutrality by 2060, 10 years after the
U.S. deadline set by President Joe Biden. If China pulls it
off, it would be the fastest decline from peak emissions among
major economies, speedier than Europe’s goal of 70 years and
the US target of 40 years. China’s plan, which the country’s
climate envoy said includes all greenhouse gases and not just
carbon dioxide, would boost global efforts to limit the rise
in temperatures and potentially give it greater sway in global
matters.

3. What needs to be done?

China has to find replacements for the fossil fuels that have
powered its economy and rapid urbanization. A key early step
was taken in July when China opened the world’s largest carbon
trading market, creating a framework for how emissions are
priced and regulated in the country. It’s already pushing the
expansion of electric vehicles and automation while investing
in nuclear power, which doesn’t emit greenhouse gases. There
is more spending on research into technologies such as storage
batteries and using hydrogen as a fuel to complement low-
emissions energy sources. The government will have develop
more wind and solar power projects so that coal-fired plants
play a smaller role in generating electricity. Local
authorities have been told to develop regional plans to lower
emissions and some have already taken measures to curb what
they perceive as wasteful uses of electricity, such as Bitcoin

mining.

The ruling Communist Party of China has an overarching goal of
creating a “great modern socialist country” to ensure a
prosperous life for its citizens. That’s a mantra that has
required continuous economic growth and led to increased
pollution. Breaking the link between growth and emissions will
require policies that take aim at fossil fuels and encourage
development of renewable energy. Monetary policy will need to
be adjusted if the transition causes inflationary pressure.
Beijing will also need to support vulnerable sectors and
regional economies during the decarbonization process. For
example, the coal industry in Shanxi contributes 20% of the
province’s revenue, according to PingAn Securities chief
economist Zhong Zhengsheng.

5. What will be the economic impact?

Services and high-technology will have to boost their
contribution to the economy, a move that could unleash
investment demand of as much as 300 trillion yuan ($46.3
trillion), according to the People’s Bank of China. The
central bank has said a big chunk of the funds will come from
market investors but a policy framework encouraging private
investment will be important. That is in addition to cleaner
air, improved road safety and prevention of potential climate
damage that the World Bank said could be worth 3.5% of gross
domestic product by 2030. Such benefits have to be weighed
against the impact on ordinary Chinese people of an economic
restructuring that phases out jobs in carbon-emitting sectors,
with the coal mining and processing industry employing 3.5
million workers alone.

6. Who are the biggest losers?

China’s 2,200 electricity utilities powered by fossil fuels, a
group that accounts for almost half of the carbon China spews
into the atmosphere and 14% of the world’s total, are among

the first to feel the impact through the country’s carbon
market. Power is one of the eight industries that account for
nearly 90% of its carbon emissions, a group that also includes
steel, construction materials and transport, according to a
report by China International Capital Corp. Eliminating their
dependence on fossil fuels will require a move to cleaner
sources such as wind and solar and spending on mitigation
measures or carbon offsets. Regional Chinese economies that
rely heavily on fossil fuel production, such as Shanxi and
Inner Mongolia provinces, will also be affected.

7. Who stands to benefit?

Electric-vehicle makers are one of the high-profile
beneficiaries of China’s plan thanks to government subsidies.
Beijing has set a target of having new-energy vehicles account
for 20% of sales by 2025 compared with 6% in 2020. Utilities
that make the shift to renewable sources will also benefit,
along with providers of services such as emission measurement
and carbon trading, according to Nannan Kou, head of China
research for BloombergNEF. Other winners could include makers
of photovoltaic systems, recycling firms and producers of new
materials and non-ferrous metals for electric vehicle
assembly.

8. What role will the central bank play?

China’s goal of carbon neutrality is shared across China’s key
institutions and is a top priority for the PBOC. The central
bank removed so-called clean-coal projects from its
definitions of green bonds while pledging to revamp tools so
it can offer cheap funds for banks to encourage more
environmentally focused loans. Regulators also plan to adjust
the rules on capital adequacy and how it counts green assets.
At the end of March, China’s outstanding green loans stood at
14 trillion yuan, an amount set to expand at a rapid pace.

9. Will private banks play a role?

Banks will need to change who they lend to and balance how
their loans mesh with Beijing’s climate ambitions. The high
capital cost of building power plants, steel mills and
factories mean companies in those sectors often carry
significant financing needs and any rapid change could affect
their ability to manage credit risks, according to Zhou
Xuedong, executive vice president at National Development Bank
and a former senior PBOC official. He said a climate-change
stress test for financial institutions will be necessary.

This story has been published from a wire agency feed without
modifications to the text.

Rising LNG imports provide
scant relief for Europe power

crisis
Reuters/London

Europe’s imports of liquefied natural gas (LNG) are picking up
as winter approaches but there is little relief for the
region’s power crunch because competition with Asia for
supplies is so intense.
Power and gas demand has spiked due to low inventories and
surging requirements in Asia and Europe as economies recover
from the Covid-19 crisis.
Cold weather in the northern hemisphere has also increased
demand for power, prompting buyers to be more active on the
spot market to bridge supply gaps and driving LNG prices to
record levels.
Wholesale gas markets are reflecting that, with benchmark
European TTF values hitting all-time highs.
Asian spot LNG prices hit a record peak of above $56 per
million British thermal units (mmBtu) earlier this month.
Prices have since retreated slightly to around $30 per mmBtu,
but are still up 500% from last year.
Northwest Europe’s LNG imports over the January-September
period were down by 5.5mn tonnes from levels seen a year
earlier, but have picked up since the start of the winter gas
season which runs from October to March, when there is higher
demand.
Competition between Europe and Asia and a spike in global gas
prices saw European TTF and Asian JKM LNG benchmark prices
chase each other higher, with the latter priced at a premium
to TTF, drawing more supply to Asia rather than Europe.
As a result, northwest Europe is unlikely to see a strong
flurry of LNG supply to help ease prices.
“Our latest balance calls for net LNG deliveries to Northwest
Europe, in Belgium, France, Netherlands and the UK, this
winter to average 114mn cubic metres per day, roughly in line
with year ago levels of 116mn cubic metres per day,” said Luke

Cottell, LNG analyst at S&P Global Platts.
Asia is home to the world’s three biggest LNG buyers, China,
Japan and South Korea, who tend to keep buying throughout the
winter. European gas storage levels were well below where they
should have been at the start of the winter season on
October1, pushing European buyers to compete aggressively for
spot cargoes.
“Competition from Asia for flexible Atlantic Basin LNG is
expected to be robust, with Northwest Europe facing challenges
in competing with largely price insensitive Northeast Asian
buyers who have continued to procure spot cargoes despite
record high JKM,” said Samer Mosis, manager of global LNG
analytics at S&P Global Platts.
Usually, when Asian LNG and TTF prices are so closely coupled,
US LNG sellers would favour sending cargoes to Europe to save
shipping time and costs, said Robert Songer, LNG analyst at
commodities intelligence firm ICIS.
But that is not the case this year.
ICIS’s LNG Edge shipping platform shows that China, Japan and
South Korea have all imported more US LNG than in any previous
year, while Atlantic Basin importers like Spain, France and
the UK have all seen smaller portions of US cargoes.
North American LNG exporters have been adding to capacity
because of demand in major Asian economies.
US exports of LNG are expected to average 9.7bn cubic feet per
day (Bcf/d) this year, 3.2 Bcf/d higher than the 2020 record
high of 6.5 Bcf/d.
This year, the United States’ exports of LNG are also expected
to exceed its annual pipeline exports of natural gas for the
first time, the US Energy Information Administration (EIA)
said in a report.
But with the bulk of US exports destined for Asia, Europe’s
best hope for significantly boosting supplies may be a mild
winter in China, which is hard to predict, analysts said.
“As long as unexpected cold from the La Nina (weather) system
doesn’t see China keep outbidding Europe for cargoes, there is
certainly some avenues for more gas to land in Europe in the

coming months,” said Ryan McKay, commodity strategist at TD
Securities.

Wall Street hails a new era
of oil prices: Higher for
longer
Could the era of cheap oil supply be gone for good?

That’s the conclusion of some of the biggest commodities desks
on Wall Street, where banks have been lifting their long-term
price forecasts, often by $10 or more.

While the US shale boom brought about a “lower-for-longer”
mantra, the market is now fixated on climate change and the
dwindling appetite to invest in fossil fuels. Instead of
growing supply, companies are under pressure to limit their
spending, causing a structural under-investment in new
production that — the argument goes — will keep oil prices

higher for longer.

“My advice to clients is that you want to stay long oil until
you know where that equilibrium price is” that brings new
supplies online, said Jeff Currie, head of commodities
research at Goldman Sachs Group Inc. “We know it’s above these
levels because we haven’t had a big uptick in capex and
investment.”

The notion of a supply gap is nothing new. Since prices
crashed in 2014, analysts have talked up the potential for
demand to outstrip production as a result of underinvestment.
But the rout in energy prices from Covid-19, combined with
pressing environmental concerns, offer reason to think this
time is different.

The number of oil and gas drilling rigs globally may have
recovered from the lows of when oil prices turned negative
last year, but they are still down more than 30% on the start
of 2020. Current figures are about as low as they were in
2016, according to Baker Hughes Co., despite headline crude
prices being near a seven-year high.

Future View

Among the banks seeing higher prices for longer, Goldman says
$85 for 2023. Morgan Stanley bumped what it calls its long-
term forecast up by $10 to $70 this week, while BNP Paribas
sees crude at almost $80 in 2023. Other banks including RBC
Capital Markets have talked up the prospect of oil being at
the start of a structural bull run.

Such estimates imply that a commodity vital to the global
economy has become structurally more expensive. Oil price
expectations underpin hundreds of billions of dollars of
equity valuations for major international oil companies like
Royal Dutch Shell Plc and BP Plc.

There’s an ever-dwindling appetite to lend on the part of

investors too. In the last week alone, the largest French
banks said they would curb the financing of the shale oil and
gas industry from early next year. Ecuador recently had to
double the amount of banks that could provide it with credit
guarantees as financial institutions shunned crude harvested
from the Amazon.

Unsustainable

Not everyone supports the idea that prices can be stay at
elevated levels. Citigroup Inc. said in a report this month
that crude below $30 and above $60 looks unsustainable in the
long-term. A prolonged price above $50 could add 7 million
barrels a day of extra supply, the bank’s analysts including
Ed Morse wrote in a note.

“Mid-term, cost indicators keep pointing to a fair-value range
between $40-$55 a barrel,” they said.

But others see a tide that’s turning, especially given changes
in the U.S., which has effectively become a swing producer in
recent years.

On one front, publicly listed U.S. shale companies remain
constrained in growing production. When EOG Resources Inc.
said in February that it planned to grow output its shares
fell the most of any company on the S&P 500. There have been
few, if any, similar comments from producers since.

Alongside that, the impact of field declines is growing
clearer. In November, the Permian Basin was the only onshore
U.S. field to show meaningful year-on-year production growth.
All others were either flat or down, according to an Energy
Information Administration report.

Similarly, while some of the key OPEC+ producers find
themselves with spare capacity that they can dip into next
year, others including Nigeria and Angola are already showing
signs of struggling to lift production further.

“People   have become very comfortable with the idea that shale
will be   there and we’re not resource constrained,” said David
Martin,    head of commodities desk strategy at BNP Paribas.
“That’s   a question mark in my mind.”

And in a world spending less money on fossil fuels, questions
then turn to demand, which doesn’t look like peaking any time
soon.

The International Energy Agency said earlier this month that
spending on fossil fuels is lower than needed if current
demand growth continues. It only sees oil demand starting to
decline in the 2030s under current policies. However, Morgan
Stanley estimates that supply could stop expanding by 2025,
leaving a sizable gap.

“We are running at net-zero type capex levels, whilst at the
same time demand is not following the net-zero trajectory,”
said Martijn Rats, an oil strategist at the bank. “Demand will
be above 100 million barrels a day for the rest of the 2020s,
but on the supply side we’re not going to produce that with
current investment levels.”

This story has been published from a wire agency feed without
modifications to the text.